The Competition Commission's ruling demanding BAA break up its airports monopoly was "riven" with the appearance of bias, an appeal hearing was told yesterday.

Nicholas Green, lawyer for BAA, told the tribunal that the alleged bias was "acute and intolerable".

In March, BAA was ordered by the commission to sell Gatwick and Stansted as well as one of either Glasgow or Edinburgh airports within two years. Airlines, which have long complained about the fees levied by BAA, rejoiced at the ruling, which was tougher than many had expected.

It followed a two-year inquiry which concluded that BAA's ownership of the UK's biggest airports, including Heathrow, constituted a monopoly.

The accusations of bias centre on the role played in the original inquiry by Professor Peter Moizer, dean of Leeds University business school. Moizer is also advising Greater Manchester Pension Fund, which is a member of the Manchester Airports Group consortium trying to buy Gatwick, the UK's second largest airport.

Negotiations for Gatwick are nearing a close and a rival bid, from Global Infrastructure Partners (GIP), is thought to be the favourite. But analysts say that other bidders, including Manchester Airports Group, could come back into contention.

Moizer declared his interest at the start of the inquiry and stood down from the panel before it came to its conclusion.

Nevertheless, Green told the hearing: "Manchester Airports Group's money is under his [Moizer's] control and advice."

BAA, which had originally slammed the ruling as "flawed", argued that it is unlawful on the grounds of "apparent bias" and "proportionality".

Green also claimed that the commission had not taken into account the cost of its ruling. "The issue is why they failed to conduct this analysis, what were the reasons and whether they were justified," he said.

The Competition Commission declined to comment, but will state its case tomorrow, the second day of the three-day hearing. The appeal tribunal is expected to make a decision in about two months.

The competition watchdog ordered the airports sell-off in March, saying that it would result in better service for passengers as rival airport operators would compete for their custom. It also said BAA's monopoly ownership had contributed to the congestion endured by passengers at its airports because there was little incentive for the group to increase capacity, particularly in the south-east.

Irish low-cost carrier Ryanair is also expected to make its own submission on Wednesday. A spokesman said that the airline would back the commission's ruling. BAA declined to comment on the tribunal's proceedings.

If the ruling is upheld, it will focus further questions on the wisdom of Spanish transport company Ferrovial's decision to pay £10.3bn for BAA, mostly using debt, at the height of the financial boom in 2006.

The deal has become one of the cautionary tales of the credit crunch as BAA, which put Gatwick up for sale to pre-empt the commission's ruling, now faces being forced to sell off the three airports for rock-bottom prices. Demand for air travel has slumped while it is much more expensive for the infrastructure funds typically interested in buying airports to raise the debt to finance a deal.

The valuations of Gatwick and Stansted are underpinned by a regulatory formula known as the regulated asset base – or RAB – which gives Gatwick a minimum value of £1.6bn and Stansted an initial price tag of £1.3bn. It is not clear if bidders will meet these valuations. BAA will use the proceeds from the sales to pay down the debts taken on by its Spanish owner to finance the 2006 takeover.